UK ACORN FINANCE LTD V MARKEL (UK) LTD

[2020] EWHC 922 (Comm), Queen’s Bench Division, Commercial Court, His Honour Judge Pelling QC, 21 April 2020

Insurance (professional indemnity) – Non-disclosure and misrepresentation – Breach of warranty – Waiver – Effect of unintentional non-disclosure – Third Parties (Rights against Insurers) Act 1930

This was a claim by UKA against Markel, the liability insurers of CLS in the years 2013 and 2014. CLS, which carried out property surveys and valuations, held a professional indemnity policy written on a claims made basis. The proposal was stated to “form the basis of and be incorporated in this contract”. The policy also provided that “In the event of non-disclosure or misrepresentation of information to us, we will waive our rights to avoid this insuring clause provided that ... you are able to establish to our satisfaction that such non-disclosure or misrepresentation was innocent and free from any fraudulent conduct or intent to deceive”. When completing the application, CLS confirmed that its business was confined to high street banks and building societies. In fact it also did surveys for sub-prime bridging lenders. In June 2013 CLS received 10 preliminary notifications of claims from UKA, relating to surveys carried out between September 2010 and December 2011. These were not notified to Markel until November 2014, on CLS’s evidence because it had become concerned that UKA had been involved in illegal money-laundering and had informed the police. A few days before renewal the brokers notified Markel of a claim from a sub-prime lender. That claim did not appear in the renewal application. UKA obtained two judgments against CLS and sought to enforce them against Markel under the Third Parties (Rights against Insurers) Act 1930. Markel avoided the policy for misrepresentation and non-disclosure.